Service Credit – Contribution Rates
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What are contribution rates?
Contribution rates represent the cost to purchase additional service credit. Rates are based upon a member’s age at the time of purchase, which more closely represents the actuarial cost of the permissive service credit.
Who is affected?
Contribution rates affect members who wish to purchase permissive service credit. The following table lists the types of service credit purchasable and whether they are impacted by contribution rates:
|Service Credit Type||Impacted by Contribution Rates|
|California State College or University of California||Yes|
|Cash Balance consolidation of benefits||Yes|
|Cash Balance Program Equivalent Service Credit||Yes|
|Child Care Center Service Credit||Yes|
|Deaf and Blind School Service Credit||Yes|
|FMLA Service Credit||Yes|
|Job Corps Center Service Credit||Yes|
|Maternity/Paternity Service Credit||Yes|
|Military Service Credit||Yes|
|Native American School Service Credit||Yes|
|Non-Member Service Credit||Yes|
|Out-of-State Service Credit||Yes|
|Sabbatical Service Credit||Yes|
|Service Under Fulbright Act||Yes|
|Local Service Credit||No|
|Non Member Spouse Refund Redeposit||No|
|Redeposit of previously withdrawn contributions||No|
|Redeposit with Local Service Credit-Converted||No|
|Uniform Service Credit under USERRA||No|
What are the new rates?
The board adopted new permissive service credit rates for fiscal year 2020–21.
|Age||CalSTRS 2% at 60 Benefit Structure||CalSTRS 2% at 62 Benefit Structure|
|73 and above||27.6%||27.2%|
Rates may be adjusted each July 1. The new rates are available in spring.
Applying for Additional Service Credit
When do I need to submit my application so my purchase is charged at the current rate?
Requests must be postmarked no later than June 30.
What happens if necessary documentation is held up by my former employer?
Certain required documentation is needed by CalSTRS to correctly approve and calculate the cost of some permissive service credit.
It is the member’s responsibility to provide this documentation. If there is a reasonable cause for delay in obtaining this documentation at the time you request a purchase of permissive service credit, we may honor the date of the request as long as you can show proof that you submitted the information to your former employer and they are unable to respond in a timely manner.
For example, proof may consist of a letter from the other retirement system indicating receipt of your request/certification or copies of all information forwarded to your former employer requesting certain documentation.
The sooner you provide this type of information to CalSTRS, the better we can service your request.
How can I estimate the cost to purchase permissive service credit?
You can estimate the cost to purchase permissive service credit by using the Permissive Service Credit Calculator. To manually calculate your cost:
- Multiply the amount of service credit (years) you want to purchase by the contribution rate for your age group.
- Multiply the result by your highest earnable compensation during the last three years.
Please read Purchase Additional Service Credit for more information.
How can I obtain my actual cost to purchase permissive service credit?
Compete the appropriate form and send to CalSTRS:
- Redeposit or Purchase of Permissive Service Credit form, for most types of permissive service credit
- Out-of-State or Foreign School Service Credit Certification form
- Verification for California Public University Service Credit form
- Consolidation of Benefits Package to transfer your Cash Balance Benefit Program contributions to the Defined Benefit Program to purchase Defined Benefit service credit. Please read Consolidating Program Coverage FAQs for more information.
Do these rates affect the Consolidation of Benefits for Cash Balance?
Yes. Read the Consolidation of Benefits Package for more information.
What if I decide to purchase a different amount of service credit after CalSTRS has processed my statement for service credit?
If you decide to buy a different amount of service credit after a statement for service credit has already been processed by CalSTRS, return the original statement within 35 days of the date on the statement to receive a new calculation.
CalSTRS will count this as a new request and add it to the processing queue, which may result in backlog-related delays in returning a revised statement to you.
However, we will honor the rates in effect at the time of the original request. Requests received after the 35 days will be subject to rates in effect as of the new receipt date.
What if I am retiring this year and don’t receive my statement?
If you wish to purchase additional service credit, you must have your request to CalSTRS before your retirement date.
Requests received after your retirement date cannot be accepted.
Once you receive your statement, you have 35 days to initiate payment via personal check or rollover. Once full payment is received, the service credit will be added to your retirement calculation and you will receive a retroactive adjustment back to your retirement date.
If I am currently paying for permissive service credit, will my balance be adjusted with the new rate?
No. If you are currently paying for permissive service credit, you are locked into the rate factor in effect when you began payments. The new rates only apply to those requests received after July 1.